Q4 2022 PriceSmart Inc Earnings Call
Good morning, or afternoon, everyone and welcome to price Smart incorporated earnings release conference call for the fourth quarter of fiscal year 2022 which ended on August 31st 2022.
After remarks from our company is represented is Jerry you bearing Becky Chief Executive Officer, and Michael Mccleary, Chief Financial Officer, you will be given an opportunity to ask questions as time permits.
As a reminder, this conference call is limited to one hour and is being recorded today Tuesday November .
2022.
A digital replay will be available following the conclusion of today's conference call through November eight 2022.
Dialing 18773 or four seven.
Seven five to nine for domestic callers.
Or one for 123170088 for international callers.
And by entering the replay access code 1071897.
For opening remarks, I would like to turn the conference call over to price Sparks Chief Financial Officer, Michael Mccleary. Please go ahead.
Thank you operator, and welcome to the price of our earnings call for the fourth quarter of fiscal year 2022.
Ended on August 31, 2022, we won't be discussing the information that we provided in our earnings press release, and our 10-K, which were both released yesterday afternoon October 31, 2022, you can find these documents on our Investor Relations website at investors thought price Mart Dot Com, where you can also sign up for email alerts.
As a reminder, all statements made on this conference call other than statements of historical fact are forward looking statements concerning the company's anticipated plans revenues and related matters.
Looking statements include but are not limited to statements containing the words expect believe plan will may should estimate and similar expressions.
All forward looking statements are based on current expectations and assumptions as of today November one 2022. These statements are subject to risks and uncertainties that could cause actual results to differ materially.
Including the risks detailed in the company's most recent annual report on Form 10-K and other.
Filings with the SEC, which are accessible on the SEC's website at Www Dot FCC Dot Gov.
These risks may be updated from time to time the company undertakes no obligation to update forward looking statements made during this call.
Now I will turn the call over to Sherri bearing baby price Martin Chief Executive Officer.
Thank you Michael Good day, everyone and welcome to our fourth quarter fiscal 'twenty two earnings call.
We had another milestone quarter in Q4 total revenues exceeded $1 billion for the quarter and for fiscal year 2022 we exceeded $4 billion in total revenues.
Net merchandise sales came in at 990 million, just shy of Italian which represents year over year growth of 13, 6% after a negative 2.9% currency impact.
Comparable net merchandise sales increased by nine 2% and that's after taking into account a negative 2.7% FX in pet.
Operating income increased 20% over the same quarter last year.
Membership accounts grew to an all time high of 1.76 million.
And our renewal rate.
We're at 88.9% holding strong.
If you recall from my last earnings call like many other retailers we were in the deck of dealing with the fallout from the global supply chain disruption.
Our team has done a great job of being proactive in executing on the plan to mitigate the impact.
We addressed the situation head on and we selectively adjusted prices are in areas, where we were having an overstocked issue. So that we could probably sell through at the other categories.
And swiftly begin to rebalance our inventory mix.
And restore begin restoring our intended margins.
We started back in the third quarter, we experienced a decrease in our total gross margin as a percentage of net marching that net merchandise sales due to higher than normal markdowns in several of our non foods categories.
Including furniture and seasonal items.
Our last earnings call. We told you that our intention was to take decisive action, especially sell through.
And hopefully be well positioned for the holiday season by the end of Q4.
We gave you our expectation about the magnitude of the impact on our margin for Q3.
Excuse me for Q4.
And then it would be about 25 to 50 basis points now with the fourth quarter in our rearview mirror, we can see that our plan works well.
Gross margin for the fourth quarter of fiscal year 2022 as a percentage of net merchandise sales was 15.5% or 40 basis point decrease from the fourth quarter for fiscal year 'twenty one.
However in terms of total dollars.
The gross margin total gross margin increased by $15.3 million or approximately 11% versus the same quarter of the prior fiscal year.
Now.
Although we've got the.
This situation hopefully behind us for the most part we do expect our inventory levels to continue to run a bit higher than historical levels in the short term.
We still continue we still have basic long transit times on some of the transports Neonics are merchandised.
However, we are driving to reduce our days at the end of inventory over the next several quarters.
Although Q4 was below the margin rate levels. We've seen in recent years, we do expect to return to our intended margin rates in fiscal 2023.
With that said, we're excited about several merchandise programs, we've been running for the holidays.
The actions, we've taken have allowed us to get our seasonal programs back onto a more normal schedule in this first quarter of fiscal 2023.
MS. Chen program has landed in the clubs do we believe that early sales are indicative of how excited the members are to find these new seasonal items.
Also the toys plan for this season have mostly landed on time and early sales figures are looking good.
Lastly, we have two promotional periods in Q1 fiscal year 'twenty three so we're looking forward to those results.
Fortunately supply chain disruptions were relatively tempered during the quarter with our overall supply chain logistics network remaining relatively stable.
The flow of merchandise was quite reliable in terms of replenishing our clubs.
And this is Glenn.
But considering the fact that shut down continued and Shanghai, China, but only had a nominal impact on our sourcing from the region.
Also on also on a positive note were seeing relief on shipping costs.
That should in shipments due to factory closures combined with slowing demand from U S. Importers is favorably impacting freight rates, reducing transpacific spot rates to approximately $15000 per container.
So we're seeing a significant decrease in ocean freight costs. The latest spot rates for October are the rates were as low as $6000 per container.
However on the other hand transit days for inbound container is loaded with our merchandise from Asia were 61 days on average for the fourth quarter versus 39 days in the fourth quarter of last year.
And were also up about a week or two to 322.
And as I've mentioned before transit times, especially for merchandise coming from Asia is impacting our days on hand of inventory.
Despite this increase in transit times. The team has plans for these delays and we have maintained very good in stock levels during the quarter.
Inflation is an important macroeconomic Ah factor that continues to have a significant impact on the cost of our merchandise.
And although we do our best to mitigate cost increases.
We can't as best we can inflation has resulted in increases in our merchandise selling prices for.
For the fourth quarter of fiscal 2022 the average sales price per item has increased.
By approximately 9% compared to the same period of the prior year.
For the same comparative period, we've seen the items per basket also decrease however transactions on a comp basis has grown by three 6% this quarter versus a year ago.
While on the topic of inflation and macroeconomic circumstances I'd like to take a moment to talk about Colombia.
Over the past year, Colombia has experienced inflation of about <unk>.
Let me clarify over the past fiscal year.
Colombia has experienced deflation of approximately 11%.
And the Colombian peso in fiscal year 2022.
Decreased devalued against the U S dollar dollar by 16%.
And just since August 31st of 2021 the peso has devalued well an additional 12%.
So we've just stops the pressures we faced in Colombia over several prior earnings calls and these challenges still exist.
There are numerous macroeconomic factors at play at price Smart, we're doing what we can that is within our control.
These pressures of course impact both revenue and margins.
We have been and will continue to take targeted measures to mitigate the FX impact and to maintain the right value equation for our members, which in certain limited cases may mean, holding the line on pricing, while aggressively managing and improving efficiencies.
So let me give you just some examples of levers that we have and this is not an exhaustive list but.
Just an example of the types of strategies.
Strategies and business practices that we take into consideration when addressing the FX situation in Colombia.
Oh, there's a concerted effort to increase local sourcing.
That also has the dual benefit of oftentimes, providing a secondary source that helps mitigate against supply chain disruption.
We carefully evaluate and adjust appropriately are mixed between local and imported products.
Another lever is shifting more overhead expense into the Colombian market.
As we grow making a concerted effort to incur expenses in local currency.
And it positions that could help support not just Colombia, but other markets as well.
And.
We can also take a SKU by SKU.
Our approach to our pricing by doing a thorough pricing analysis to strategically adjust pricing on certain items. So that we can protect our members' loyalty and shopping patterns.
So in Colombia, the overall margin percentage, maybe impacted depending on our approach, but the strategy and goal would be to protect and grow margin dollars overall.
And separate from margin, we believe that this will translate into attraction of new members and member retention protecting membership income.
In essence, we want to have price might be a comparatively safe havens for the members' needs during a challenging and difficult environment for us and the members.
We learn something important through our experience with the Covid pandemic.
The value of member loyalty.
We you can't.
Underestimate that we believe that the measures we took to protect members is part of what has yielded us a significant increase in sale.
Membership growth and renewal rates.
So we believe this in addition to the other levers that I've mentioned.
<unk> is the best way to navigate through the current currency and economic environment in Colombia.
We are strong believers in Colombia, and we think it's a a.
Company Rich with talent and member profiles that are exactly in line with our value proposition, but the reality is that we have to navigate through this and we're going to be very targeted and very specific about what we do to make sure that we protect our business.
And we continue to grow there.
Speaking of membership our total membership base grew to a new record of 1.76 million accounts.
Representing growth of five 5% versus last year.
Our 12 month membership renewal rate was 88, 9% and our membership income was a record $15 $6 million an increase of six 7% over the same period last year.
This is very encouraging to see during a time that everyone is looking for ways to save.
We believe we have an important role to play and an opportunity to further reinforce and validate and prove our value of our club concept. The members during times of economic pressure.
As we look to the future our company remains focused on our three major drivers of growth expanding our real estate footprint.
Foot print and new clubs and new distribution facilities.
Increasing membership value and driving incremental sales via price might dotcom and enhanced online digital analytics and technological capabilities.
To give you a quick update starting with real estate as we previously discussed we currently have two warehouse clubs under construction, one will be a smaller but very efficient format warehouse club that we plan to open in the spring of 2023.
The city of San Miguel approximately 100 miles east of the capital City, San Salvador El Salvador. This will be our third club in El Salvador. In addition, construction is proceeding at a smaller format warehouse club in the affluent L. L plateau areas, but even Colombia, which is expected to open in the summer of two.
Twenty-three.
It would be our second club in the gene at the company's 10th Warehouse club in Colombia.
Once these two new clubs are open we'll be operating 52 warehouse clubs.
In addition, we continue to maintain a good number of perpetual clubs at various stages in our pipeline. We also believe there are opportunities to expand the capacity of our existing clubs through various strategies.
As we fine tune. These smaller club formats, we're finding operating efficiencies that we believe will allow us to increase our square footage productivity.
Another part of our real estate strategy focuses all the important role of our distribution facilities to optimize efficiencies and reduce risks.
We currently operate nine distribution centers in seven of our 13 markets. We continue to explore ways to utilize our distribution centers more effectively such as by changing the frequency and flow of merchandise to back the lifestyle of the space at our club.
We also believe that in the future, we'll be able to use these distribution centers just fulfill some of our online orders. So they will not need to be sourced out of our clubs.
We continue to analyze new locations for as modified views of local distribution centers in several areas that serve our central American Caribbean Colombia.
Columbia markets. We're also reviewing a potential site.
Kettle sizes, the northern triangle countries for a regional distribution center. In addition to more efficiently servicing clubs in this region. This would give us near term options to create alternative routes for imports from Asia. In addition to job creation in these important markets.
Excuse me for a second.
Now I'd like to turn to and it has take membership value.
Well that's it is really building with our private label to remind you that's our.
Our never selection program, where we put it under our own brand our quality merchandise that is as good or better than the leading brand name.
And for a better value better price.
So during fiscal year 2022 our private label sales represented 24, 7% of our total merchandise sales that's up 260 basis points from Twenty-twenty excuse me, 22.1% in fiscal year 'twenty, one we closed out the fourth quarter of fiscal year 'twenty.
22 with growth of 27, 7% compared to the prior year and for the trailing 12 months ended October 16, 2022 we surpassed $1 billion in annual private label sales.
This was the goal and a challenge that had been a good.
Even to our private label team by team and they've really delivered.
Additionally, we continue to see growth in our fresh assortment for example, our U S fresh category for fiscal year, 2022 thoughts private label sales growth, 30% versus the comparable prior year period, we intend to further expand the private label category for fiscal year 'twenty three to include items, such as butter milk.
Chicken bites and fresh and frozen pasta.
As we expand our private label offering we see several benefits and.
Elements that are really beneficial to the climate that we're in.
One is obviously the better value to the member.
Now there is a we have some control over where we want to source the product from or develop it or even a manufacturer it which can be helpful. In circumstances, like Columbia, which I referenced earlier.
Our private label provides a unique offering it's only available at price March so it does add to protecting the brand and as well as the.
The membership.
And.
In terms of enhancing that were benefits obviously the focus is on doing everything we can to.
Maintained.
Pellet prices.
And avoid any kind of costly a supply chain disruption impact. So we have also made a concerted effort to dual source.
Very key items and that helps us reduce risk.
Dual sourcing at meat and seafood.
And to the strong go to strong growth.
We have identified secondary sources for 27 of the top 30 U S. Fresh items and we continue to focus on dual sourcing for key high volume programs.
Dual sourcing remains an ongoing initiative to maintaining in stock levels as we seek to minimize challenges and freight delays and cost increases it.
In addition to our dual sourcing efforts, we are actively seeking and making progress towards nearshoring items, such as fish frozen fruits and vegetables or within Latin America to service the region, well, which we are expecting to phase in during fiscal year 'twenty to 'twenty three.
And again with our membership benefits, we offer wellness programs, which includes optical audiology at pharmacy optical we currently have 47 locations.
Have a 49 by the end of the calendar year.
And that's the program, where there's four free eye exams with every membership.
And this also relates to social responsibility at our S. G. We performed over 127000 I bet.
Oh excuse me we are in the in this program. We performed 127000 eye exam. So far it's been a tremendously successful program.
With regard to ESG.
We are also doing some.
Our free exams for schoolchildren and we're finding that it's an important social contributor to our local communities.
In partnership with price Philanthropies upward dairy crest Theres program. We provided approximately 8000 screening 2000 exams at 1800 eyeglasses to local school children during the fiscal year and we're very excited about having this service available to support our local communities.
Currently have pharmacies that are that all eight of our warehouse clubs in Costa Rica, we expect to have pharmacy service at all seven of our Panamanian clubs by the end of the fiscal year and we continue to analyze the opportunity for additional countries.
Audiology services.
'twenty two we operated five and we expect to open an additional 28 its fiscal year 'twenty three.
Now our third driver growth driving incremental sales using price Mart dot com and it has to get efficiencies and opportunities for sales using digital capabilities and data analytics.
For the fourth quarter total ecommerce sales represented three 7% of total merchandise sales now.
Now mind you, we just started a R E com and typical year 'twenty 'twenty during the past debit.
Total online sales for fiscal year 'twenty two grew over at the.
The prior year by 24.2%.
When we compare it to the comparable prior year period online sessions increased five 4% with an average online order value increase of 12, 5%, which led to an increase of online orders of six 8%.
So we're seeing some really encouraging signs with regard to how our members react to their online experience with us and price Mart Dot com in general.
In addition, we continue to evolve our e-commerce experience and have seen a solid return on modest content enrichment investments.
<unk>.
For example, our pilot tested 30 member selection of items, we saw a 38, 8% dollar increase in sales at 42% unit increase for the month of September 'twenty 'twenty. Two on these items sold online with one month of launching the enhanced content on our sites.
This is this just goes to show the impact of.
It has to take the information and engaging with our members in a more convenient way and these sales may occur online. They may occur in club, but the presence online is definitely helping in terms of engaging our members and appears to be generating increases in sales.
Lastly in late August we increased pickup slots during key demand in times that are Jamaica clubs by six 3% or four 446 slots. This contributed to the highest online single month.
Oh sale ever in September for Jamaica, with orders, increasing by 19, 6% for the same period.
Now as of August 31st 2020 to approximately 51.4% of our members of creating an online program with Priceline Dot com, that's more than half of our base.
And that's up from zero two years ago.
We believe that there are significant growth opportunities in our digital channel, 13% of our total membership base has made a purchase aren't quite smart dot com. The average online purchase and I think this is important too to see the average online purchase price of our dot com in Q4 was.
<unk> 37, 7% higher than the average ticket for each club purchases and it grew 12, 5% versus Q4 of last year.
We will continue to invest in this part of the business in an effort to provide enhanced omnichannel experience to our members.
And at least the early indications are that our members are expecting this type of service and shopping experience.
Another of our online areas of focus as membership sign up would reveal eight 5% of new memberships were purchased online through the last quarter and online renewals represented four 3% of our total rebuild it.
It's also encouraging that eight 3% of our total membership base at 176 million membership accounts as it rolls in our auto renewal option. This increase in online auto renewals effectively allows for a component of our income to become more reliable and more predictable AR, which is obviously something that is a great benefit.
In this climate.
Our omnichannel members.
<unk>.
Those who shop, both online and the club had approximately three more transactions than in club only members during the fourth quarter and orders are for.
For this category of member grew 19.2% with the average spend for this group growing 17% compared to the prior years fiscal fourth quarter.
These omnichannel members represented approximately 5% of total members, making a purchase during the quarter.
No.
That we can see that there's a significant opportunity for this penetration to increase over time and it's the behavior looks anything like what we're seeing if it shows a good opportunity for growth in sales.
So now turning to ESG, we recently issued our first environmental and social responsibility report in both English and Spanish and I encourage you to read it it's available on our Investor Relations website under the ESG section I've already shared with you. Some examples of philanthropic with social.
Profitability efforts and our ESG team is doing an amazing job of identifying.
Really compatible beneficiaries and getting our company more engaged with the lab would be a social responsibility.
It's been very exciting.
The company's actual just practices also aim to responsibly use natural resources and focus on environmental impact.
Listen to social wellbeing.
The last call. We told you we open our recycling et cetera, San Pedro Sula club in Honduras and in October we opened two additional collection centers.
These are salaries were members of the community kept bring their own cycling and actually be a sub cases get paid for the material.
So we are planning to open 30, more recycling collection centers in fiscal year, 2020 three and in a prior call I already covered with you are a packaging plant in Trinidad where we are manufacturing our own packaging of labor and materials that are more.
Environmental friendly.
Our commitment to sustainability remains strong and we're committed to fostering a safe and healthy environment for our employees members that there's communities and the world around us that we consider to be part of price sports gambling.
As I conclude my prepared remarks, I, just like if you get some insights into our Q1 of fiscal 2023 based on the month ended on September 30 of 2022.
While there's much uncertainty ahead due to the current economic climate, we're off to a strong start.
Total net merchandise sales were $324 1 million an increase of 12, 1% over the same period in the prior year at comparable merchandise sales for the four week period ended October <unk> 2022 increased seven 8% compared to the comparable period last year.
However, once again currency fluctuations continued to negatively impact that merchandize sales and comparable net merchandise sales by key 0.0% in two point once you start respectively. In the first month of the fiscal court.
Yes.
So before I turn the call over to Michael I, just want to acknowledge our team I, especially want to call out buying operations and finance to have really done a fantastic job of correcting horse and getting us back on track in terms of our merchandise inventory levels and mix, while we continue with our plans for growth.
Over the past few years, our team has been tested over and over by unprecedented circumstances at.
And each time, our team delivered its got even better.
And just the last two fiscal years, we've grown total revenues for the clubs business by approximately $773 million under very challenging circumstances.
So.
I want to acknowledge our 10000 employees across 30 markets, who are the backbone of this business and deliver over and over again.
They enhance the quality of life for our members of the markets that we operate it no matter what the challenged.
I want to thank you.
Alright, I will turn the call over to Michael.
Thank you sure.
Good morning, or afternoon to everyone and thanks for joining us today.
About our fourth quarter results.
Total revenues I remember myself came in at one point or $2 billion and $990 million for the quarter respectively.
<unk> was up four 3% from 13, 6% respectively over the comparable prior year period.
We ended this quarter with 50 warehouse clubs compared to 47 warehouse clubs as never before quarter for fiscal 2021 for a comparable net merchandise sales growth for our fiscal fourth quarter was nine 2% for the 14 weeks.
For 2020 group foreign currency fluctuations had a negative impact on net merchandise sales and comparable numbers most of those growth of two 9% on 2.7% or approximately $24 million and $24 $9 million respectively.
By segment in Central America, where we had 27 clubs at quarter end net merchandise sales increased 11% with a seven 7% increase in comparable numbers Marshfield.
Currency fluctuations had a negative impact on net merchandise from comparable net merchandise sales growth in Central America of approximately three 4% from three 2% respectively during the quarter.
All of our markets in Central America had positive comparable numbers most of those group, except for Guatemala, which is experiencing feels good transfers from other warehouse clubs to our new Roomba Corp.
And the Caribbean region, where we had 14 clubs at quarter end.
Remember, it's mostly all increased 22, 1% and comparable numbers, most girls increased 15.7%, Trinidad and Tobago net merchandise sales increased 26 point, 40% for the quarter and contributed two 1% of our total networks most of those girls are approaching 40%.
The significant improvement in Trinidad person for prior period was largely due to COVID-19 closures and restrictions last year combined with our decision to increase the reported inventory levels in the current grid to meet current demand, which would help to increase sales of our ability to source additional your stores as a group.
In Colombia, where we had nine clubs opened at quarter end merchandise sales increased seven 6% primarily due to opening a new club in Q1 2022.
And we had comparable net merchandise sales increased four 2%.
Foreign currency fluctuations had a negative impact on merchandising and comparable net merchandise sales growth in Columbia sportswear.
Seven 3% on three important 7% respectively during the quarter.
In terms of merchandise, we saw the fruits category grow approximately 9% compared to the same quarter in the prior year.
Our brokerages, Maxim cookies, and oils and condiments category led the way with 22%, 17% and 15% growth respectively.
Our fresh category grew 11% compared to the same quarter in the prior year led by our Gourmet foods poultry.
Food departments were 21%, 15% and 11% growth respectively.
Our non foods categories grew 9% compared to the same quarter in the prior year, albeit we experienced some margin compression where most of the algebra categories works with regulatory we had quite a bit.
The end of the third quarter. In addition to improved conditions in Trinidad and Tobago boosted sales group for nonfood categories. These categories have generally performed quite well in this market.
Our other business category rebounded with 11% growth, primarily from our food service bakery and optical departments.
Turning to margins total gross margins of merchandise sales were in line with expectations at 15, 5% for the quarter versus 15, 9% for the same period last year.
Oh sure. He described we spent the quarter working through their overstocked positions in some of our non foods categories. As we focus on getting back to our core business and a more standard inventory balances and customary margin structures, we still have some excess inventory in some of our apparel categories, where we expect to be able to work through this inventory all generally returning to our pre Q3 overall margins.
Yeah.
Total revenue margins decreased 80 basis points to 16, 9% of total revenues when compared to the same Peru. Bolster this revenue margin decrease was primarily attributable to a 40 basis point requiring in merchandise gross margin and a decrease of 30 basis points due to the sale of the repos during the first quarter.
Mhm.
SG&A expenses decreased during the quarter by 100 basis points as a percentage of total revenue primarily due to the sale of variables, which lowered warehouse club and other operating expenses by 60 basis points in general and administrative expenses were 40 basis points for a total of 100 basis points. We've embarked on this journey of expenses.
Operating income for the quarter increased 20% from the same period last year with $39 million. Other expenses of $1.4 million was primarily driven by $1.6 million in transaction costs associated with converting trimmed about dollars and cents attributable currencies.
Our effective tax rate for the fourth quarter of fiscal 2022 came in lower than last year at 34, 2% versus 45.5% a year ago with our full fiscal year 2022 rig coming in at 33, 2%. The decrease in the effective tax rate is primarily related to the favorable impact from changes in income tax liabilities from uncertain trucks.
Physicians.
On a go forward basis, we estimate an annualized effective tax rate of 42% to 43%.
Net income for the fourth quarter of fiscal 2022 was $23 $3 million or 75 cents per diluted share compared to $19 5 million or 63 cents per diluted share in the comparable prior year period.
Moving on to the strength of our balance sheet, we ended the quarter with cash cash equivalents and restricted cash totaling $251.4 million from a cash flow perspective for the 12 months ended August 31, 2022 cash provided by operating activities decreased $3 million compared with prior year, which was primarily a result of no changes in operating assets.
Tomorrow abilities.
Specifically changes in various components of working capital in non current assets resulted in a $14.8 million use of cash for fiscal 2022 compared to providing $13 $1 million a car.
The old in 'twenty one.
Another contributor to the change in cash flow from operations with our inventory position heading into the peak holiday season would you increase for $464 4 million doors.
31st 2022 versus $389 million or the August 31 2021.
This was due to a combination of factors, including purchasing patterns inflation pending pockets about confirmatory and the addition of three new clubs.
Our total is our goal is to decrease our inventory days on hand, as we continue to rightsize their inventory dollars.
Net cash used in investing activities decreased by $42 million for the 12 months ended August 31, 2022 compared to the prior year, primarily due to the decrease in the current period of her purchases.
Total deposits due to improved availability of U S dollars in Trinidad.
With respect to turn to our balance of turnaround dollar denominated cash cash equivalents and short and long term investments measured in U S. Dollars further improve this year decreasing $27 $9 million for Merck was called 2021 in the Bronx to approximately $25 million.
Net cash used in financing activities decreased by $82 $9 million, primarily due to lower net repayments of short term debt compared to the same 12 month period, a year ago. When we were repaying short term facilities access with the early stages of the COVID-19, pandemic and obtaining additional financing.
In closing, although our results for the quarter were impacted personal and continued margin compression, we believe that the fundamentals of our business remain strong.
Hum excuse me as evidenced by our strong sales growth and solid membership sign ups and rural roads, we are probably being powerplay smart team for working through the recent merchandise challenges and positioning us for a strong 2023, we are excited about the upcoming holiday season, and we believe our value proposition and the investments we're making in entertainment.
And how we conduct our business it resonates with our members are working in our communities.
Yeah.
Before I turn the call over to the operator, I want to remind everyone. As we look forward to our fiscal 2023 first quarter results, but when comparing these results to the prior year in the first quarter of fiscal 2022, we recorded a nonrecurring gain from our disposal of airport, which positively impacted earnings by parts of them for sure.
With that I will turn the call over to the operator to take your questions.
We will now begin the question and answer session.
To ask a question you May Press Star then one on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys.
If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
The first question today comes from Jon Braatz with Kansas City Capital. Please go ahead.
Good morning, Mike.
Good morning, I'm sure I appreciate the color.
On Colombia.
As you can pull and so on but you know what the currencies depreciated quite a bit.
Generally speaking in broad terms, what are you seeing from the consumer.
Consumer behavior in Colombia.
As a result of the the weakness in and and the Colombian peso how's that affecting the cuts.
Humor in Colombia.
Well I just.
Just like you would expect there is a bit more conservatism.
And there are.
Shopping patterns are.
Tilting more towards essentials and basic goods.
We're seeing fewer.
Fewer items in the basket.
And.
People are being much more measured but are.
He was giving you the results of our overall performance there I do believe there's an opportunity for us and we've seen it in certain circumstances in the past.
Where when people become more disciplined about their spending.
We play an even more important role.
Cuz, we're known in our communities should not not gouge not pay play a high low games would be if we make a mistake we make it in favor of the member.
And we work extremely hard to get the best value, we can to our members. So.
There is a conservatism absolutely and we're seeing it but we're seeing it in other markets as well.
But we're also saying that were very well received I mean, if you.
If you look back at our.
Our membership base has grown there.
Went through a period of couple of years ago, where there was some retracting, but now you know we've been.
Building again for FY 'twenty, two but 23 may be challenging.
It may be challenging I mean, it's that's just the reality so it's our job to do everything we can.
And there are opportunities, it's amazing there are opportunities where.
Like looking at our categories and our Skus.
One by one and something that I.
I don't think we've done in the past go to that level, but.
But we can be very strategic about our pricing.
Structure on items and continue to earn the base and the trust of the members so they.
Continue to not only shop with us, but rely on us and perhaps even win more business I'm not.
Sure Hum you mentioned you talked about your September sales and there was a little bit of relative softness in.
And the comps versus what we saw on the fourth quarter.
Is that more broad based or was that something more isolated to the to the issues that we're seeing in Colombia.
Well, Colombia had a significant owns a significant part of that but we've had.
I think Michael just shared with you in Central America, we had pretty strong positive comps.
In all markets except for.
Walmart and let's see here.
Yeah.
Okay Windows.
Okay Yeah.
Yeah go ahead.
We see if Michael Scott Yeah, we did we did disclose in the country a little bit of flavor about kind of recent results in Colombia.
Okay. Okay.
There's a little bit.
Vectra flavor for Q4 and the.
September Okay, I must have missed that one.
The 10-K, Mike.
U N and there's a little something sitting there that says Oh, how about your export sales and how you might be exploring opportunities in other markets beyond the Philippines, and I don't know if you've mentioned that before.
Recall, but is there something.
Is there a new opportunity there you're you're you're working on.
Yeah.
We are job when we have a pretty seasoned executive who is looking for opportunities for us to be able to sell.
Sell through either a licensee or sell in other markets and we it's not material yet in terms of these new opportunities. So I prefer to wait and report on it when we've got some good results to share with you, but there are some theres. Some progress is being made on two fronts.
And one is a very new idea, but but that would allow us to have some additional income in the U S. When we generate sales and profits.
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Through the export sales.
Okay. Okay, alright, thank you very much.
Alright, thank you.
This concludes our question and answer session I would like to turn the conference back over to Sherri Burns for any closing remarks.
I want to thank all of you and our employees and.
Our investors for being part of our endeavor here to continue to bring good value to the members and do good things and in our markets, especially during challenging times, we're very proud of our results and we're committed to doing the very best we can as we go into 2023. So hope you all have a good day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
[music].
Hmm.
Uh-huh.
Yeah.
[music].